SHORT SEA SHIPPING: WATER HIGHWAYS THE COUNCIL OF STATE GOVERNMENTS EASTERN REGIONAL CONFERENCE AUGUST 12, 2007

1. SHORT SEA SHIPPING: WATER HIGHWAYS THE COUNCIL OF STATE GOVERNMENTS EASTERN REGIONAL CONFERENCE AUGUST 12, 2007

2. Secretary of Economic Affairs Secretary of Transportation Port Users Seaport Council Council Chair Lt. Governor Tim Murray Lt. Governor Chair Secretary of Environment Port Mayors Secretary of Finance Director of Massport The Massachusetts Governor’s Seaport Advisory Council Mission Statement “Develop the commercial maritime resources of the Commonwealth both physically and institutionally into a “Port of Massachusetts”, each of the several ports working cooperatively doing better what each does best and thereby creating and enhancing an integrated land/sea transportation network as access to the global market place in support of the economic development needs of the Commonwealth” Advise Governor Port Development Port Security Port Governance / Planning Short Sea Shipping

3. Prologue Come Full Circle Short Sea Shipping Public / Private Partnership = Not as a Competitor, But as an Intermodal Partner

4. SSS SHORT SEA SHIPPING IS TWO DIMENSIONAL “The movement of goods and people by water without crossing a major ocean”

5. HUNT WHERETHE DUCKS ARE

6. “The International Diversion” Off on the Wrong Foot

7. International Diversion Failures Abound • Port NYNJ to Albany • Gulf Service • Pacific Northwest 92%+ of Freight = 53 footers Driven by Deep Water Ports

8. THE DUCKS 92% OF ALL FREIGHT ON OUR HIGHWAYS MOVES IN 53’ DOMESTIC TRAILERS

9. DOMESTIC MOVES NOT THE 40 FOOT CONTAINER

10. International Diversion Steamship Lines Make it Impossible Starts as steamship to barge Service reaches critical mass to be profitable Steamships won’t absorb increasing customs, border and barge fees Steamships instead make another port of call The Short Sea service fails

11. TIME CHANGES EVERYTHING! 1 Acceptance Index 0 Time

12. The Problem Strangulation of the Region’s Commercial Highway System • Bi-state highways b/w NJ & NY moved > 250 million vehicles in 2002 • The number of trucks is expected to double in the next 10 years

13. HM Tax Access Vessels Costs CCF Continuing Hurdles for Short Sea • Large, High Cost Terminals • Few Quick Turn-around Low Cost Operations • Road Access to Terminals • Congestion • Landside Delays MARAD Capital Construction Fund Not Available for Contiguous Trade • No Action by AAPA • Port Canaveral Legislation Needs Support • No SEA 21 • No Jones Act Vessels • Domestic Yards: >40-60% Costs

14. Port of New Bedford Port of Fall River Port Canaveral Studies and Research Massachusetts Short Sea Study September 2006 • Components of Massachusetts Study • Short Sea Shipping Models for Smaller Ports • History of Applicable US Short Sea Shipping • US Short Sea Shipping Initiatives • Factors that would Support SSS Port Canaveral • Factors that would Support SSS Fall River/New Bedford

15. Port Pairing Study Short Sea Market Analysis • Short Sea Shipping Models for Smaller Ports • Relate Models to Fall River & New Bedford • Identify Impediments & Localize to MA • Identify Potential SS Routes: Origin & Destination Points • Identify Benefits: Economic, Environmental • Identify Drivers for Success in Model Oriented Way

16. Port Pairing Specific Links that Tell a Story What Moves $ $ $ $ At What Cost Catchment Area Size Volumes

17. Port Pairing Catchment Areas Prospective Cargo Hinterlands for Short Sea Shipping Traffic Between Jacksonville and the Bristol County Ports Source: Global Insight Transearch Database

18. 200 150 100 50 200 200 50 50 100 100 150 150 50 100 150 200 Today Tomorrow The Model

19. New Bedford / Fall River The Model The Specifics Short Haul Bayonne Long Haul Jacksonville

20. Shipper Preferences % Diversion 14 12 Jacksonville 10 Bayonne 8 7% 6 Break Even Diversion 4 2 5 10 15 20 25 30 35 40 % Differential Cost

21. Shipper Preferences • Truck Load Only LTL Demands Faster Times & Fewer Hand-offs • Reliability Issues Due to Experience with International Shipments

22. The Mathematical Model & What it Predicts Assumptions: Service Hurdle/ Cost Hurdle DECISION TREE To Limit Model to Workable Numbers Service Hurdle > 2 Days ≤ 2 Days NO! Cost Hurdle ≤ Cost > Cost NO! Will Consider!!!!

23. Distance/Volumes Favor Short Sea Competition Index Diversion Begins 1 0 Distance Volume

24. 1.9M Trailer Loads Move to Bristol County What We Learned 1.4M Trailer Loads Move From Bristol County To Work: Larger vessels need to penetrate 7% of market share Smaller vessels need to penetrate 2-3.5% of market share

25. Minimum Requirements for Success • Distances of at Least 400 – 500 miles • Back-haul Opportunities • Critical Mass to Support Frequency of Service • Adaptable, Efficient Terminals • Flexible Labor Contracts • Jones Act Vessels (Barges, Fast Ships, Small • Flexible Ships)

26. Advantages • Guaranteed Times • Landings Closer to Origin/Final Destination • Less Dredge Requirements – Smaller Ships • Utilization of Smaller Ports • Expanded Opportunities for Deep-water Ports • Quicker Delivery Times • Cost Benefits ( Ferry, Small Trucks, People)

27. IN SUMMARY • Very difficult to reach breakeven on short hauls (< 300 miles) • Demand is Elastic – Shipper (trucker) preference can and will change in the right economic climate

28. Short Sea Partners North Atlantic Ports Association US Maritime Administration Coastal Coalition I-95 Corridor Coalition

29. Memorandum of Cooperation BETWEEN Port Canaveral, Florida as represented by For the Canaveral Port Authority Chairman of Board of Commissioners, Tom Goodson AND The Ports of Massachusetts The Seaport Advisory Council as represented by The Honorable Timothy P. Murray, Lieutenant Governor The Commonwealth of Massachusetts Chair, of the Seaport Advisory Council For the Port of New Bedford Mayor Scott W. Lang For the Port of Gloucester Mayor John Bell For the Port of Fall River Mayor Edward Lambert And For the Port of Salem Mayor Kimberley Driscoll

30. State Action Needed for Short Sea • Terminal Access (Land / Water) • Dredging • Road Networks • Rail • Terminal Facilities • Small Municipal Based • Quick Turn Around

31. The Port of Fall River The Future as a Short Sea Hub

32. Today....

33. Rail and Highway Infrastructure • Only public active dockside rail in the Commonwealth • Access to Route 195

34. The project site Fall River Multi-use Terminal Project

35. GEOGRAPHY

36. Flex Space Project Overview LEVEL ONE MARINE INDUSTRIAL • Marine cargo Short Sea Shipping, global trade • Cruise, Excursion Vessels, Charters • (Vertical Integration) • Performing Arts • Exhibition • Office • Restaurant (level 3) Construct a State of the Art Multi-use Facility on Fall River State Pier UPPER LEVELS SUPPORTING USES

37. Architectural Rendering of the Fall River Multi-use Facility

38. Contact Information: Richard Armstrong Office of the Governor/ Lieutenant Governor Director of Port Development Executive Secretary Massachusetts Seaport Advisory Council 40 Center Street Fairhaven, MA 02719 rick.armstrong@state.ma.us http://www.state.ma.us/seaports (508) 999-3030 telephone (508) 999-6442 fax